House votes to repeal ban on exporting crude

Overturning ban faces harder road in Senate

By Jennifer A. Dlouhy, Washington Bureau

October 9, 2015Updated: October 9, 2015 11:16pm

WASHINGTON — The House voted Friday to repeal a 40-year-old ban on most crude oil exports, delivering a short-term victory to the oil industry, which faces long odds duplicating the success in the narrowly divided Senate.

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The issue is a top priority for energy companies such as Anadarko Petroleum Corp., ConocoPhillips and Pioneer Natural Resources, which argue that oil exports would be good for business, helping to keep rigs working in U.S. fields and sustaining jobs amid a global collapse in crude prices. Crude exports are seen as a way to boost U.S. oil prices, which often are lower than international crude benchmarks.

In the first vote of its kind, the House voted 261-159 to pass legislation that would undo trade restrictions blocking most unprocessed U.S. crude from being sold outside the country, with 26 Democrats joining 235 Republicans in support of the bill.

The results fell short of the 290 “aye” votes needed to overcome a threatened veto from the Obama administration, which says removing crude export restrictions “is not needed at this time.”

Oil producers aggressively lobbying for the change worked with Capitol Hill allies to line up Democratic support, in hopes of building a veto-proof majority, bolstering the bill’s bipartisan credibility and boosting pressure on the Senate to act.

Refiners, including San Antonio-based Valero Energy Corp., had lobbied against lifting the ban.

Bill sponsor Joe Barton, R-Ennis, said some lawmakers voted no despite being “very close” to supporting the legislation. “We didn’t get the veto override votes, but we got close enough to it that we can be optimistic,” Barton said.

Among the opponents were Texas Democrats Gene Green and Eddie Bernice Johnson, both of whom have supported the legislation previously but said they want more safeguards in place before radically rewriting U.S. oil trade policy.

Similar concerns have surfaced in the Senate, where Republican leaders may be unwilling to bring up the polarizing bill without confidence that they can secure 60 votes to beat back filibusters and pass the bill, much less the 66 they would need to override a presidential veto.

“This bill is dead on arrival,” said David Turnbull, campaigns director at Oil Change International, which wants the country to move away from fossil fuels. “Even this oil-soaked House of Representatives can’t muster a veto-proof majority, and it is clear they don’t yet have the votes they need in the Senate, either.”

Export advocates are considering an array of strategies for advancing the bill in the Senate, including embedding it in unrelated, must-pass legislation to fund the government or pay for highway projects around the country.

“What we could do is provide a benefit to the large oil companies as part of a larger package that would help everybody,” said Rep. Earl Blumenauer, D-Ore. “Let’s put together a package that speaks to alternative energy, that speaks to conservation, that speaks to a long-term strategy that is a win-win.”

Under one recently floated possibility, crude exports could be tethered to a reauthorization of the Land and Water Conservation Fund, a 50-year-old program sustained by offshore oil and gas revenue that helps states and federal agencies buy land for recreation.

Other possible deals include expanding renewable energy incentives and axing some tax breaks for the oil industry. But increasing industry taxes is a nonstarter with oil companies.

“It doesn’t make any sense,” said American Petroleum Institute President Jack Gerard, “and it’s inconsistent with accomplishing the benefits we could get from lifting the ban: creating new jobs, lowering the price of gasoline in the country and making us more energy secure.”

Some oil export boosters are wary of cutting any deals on the legislation because a new president taking office in January 2017 could lift the trade restrictions without help from Congress. Several Republican presidential hopefuls support crude exports.

“A good, strong bipartisan vote in the House for lifting the export restrictions should now not be diluted by anyone agreeing to a smorgasbord of unrelated energy provisions being advanced by our friends on the political left,” said Stephen Brown, vice president of governmental affairs for San Antonio-based refiner Tesoro. “That would be the quickest way to take support for the legislation to active opposition.”

Export supporters cast the trade restrictions as a relic of the 1970s, when an OPEC crude embargo prompted gasoline lines and rationing in the United States, and said it doesn’t mesh with surging domestic production. U.S. producers are using hydraulic fracturing and horizontal drilling to extract about 9.3 million barrels of crude per day.

Barton said “Big Oil” wouldn’t be the only beneficiary.

“This bill will help all 50 states,” he said. “It helps low-income (people), it helps minorities, it helps women, it helps every sector of the economy — not just the drillers and the roughnecks.”

But opponents argued that unfettered crude trade would enrich oil producers at the expense of the environment, national security and refiners buying discounted supplies today.

The longstanding oil trade restrictions apply to raw, unprocessed crude, not the gasoline, diesel and other petroleum products that refineries churn out and sell globally.

Rep. Kathy Castor, D-Fla., said the legislation would “eviscerate” a “smart policy” that allows some U.S. crude to be sold to foreign buyers today. For instance, there are exceptions allowing oil shipments to Canada and exports of some crude extracted in California and Alaska.

“It’s not a ban,” Castor said. Current policy “allows and promotes oil exports to strategically important allies, to places in the national interest. … But now Big Oil wants free rein to ship natural resources to countries not in our national interest.”